State treasurer Duane Davidson warns of recession risk, says state reserves are falling short of recommended level.

State Treasurer Duane Davidson last week told the Association of Washington Business Lobby Lunch that the state is not prepared for the inevitable downturn. (Reserve discussion begins about 8:50.)

The AWB Fast Facts reports,

“We’ve got growth that’s unprecedented, in the country,” Davidson said. “…And yet we continue to tamper with transfers out of the rainy-day fund.” The Government Finance Officers Association generally recommends that state and local governments set aside 15 percent or at least three months of general fund spending in case of a downturn, he noted.

“We’re not there yet,” he said. And there will be a recession, he added, it’s just a matter of when.

“And I don’t think right now, the state is equipped, basically, to face that,” he said.

With three-quarters of business economists predicting a recession in the next two years, the coming slowdown should be at the forefront of state lawmakers’ budget considerations.